CTC vs in-hand salary: why the offer letter number is bigger
Cost to Company (CTC) is everything the employer spends on you in a year, not what reaches your bank account. Part of it never becomes salary at all: the employer's own provident fund contribution and, in many companies, a gratuity provision are counted inside CTC. From the remaining gross salary, your own PF contribution, professional tax and income tax (TDS) are deducted every month. That is why a ₹12 lakh CTC rarely means ₹1 lakh a month in hand.
What this calculator deducts
- Basic salary as a percentage of CTC (commonly 40–50%). PF and gratuity are calculated on basic.
- Employer PF (12% of basic): part of CTC, goes to your EPF/EPS account. Many employers cap it at 12% of ₹15,000 a month (₹1,800) – choose "capped" if your payslip shows that.
- Gratuity (4.81% of basic): some companies include it in CTC; it is paid only after five years of service, so it is not monthly cash.
- Employee PF: the same 12% is deducted from your gross pay.
- Professional tax: a state tax, up to ₹2,500 a year (Maharashtra and Karnataka levy it; Delhi, for example, does not). Edit the amount for your state.
- Income tax for FY 2026-27 using current slabs, the ₹75,000 standard deduction (new regime) and the 87A rebate.
Example: ₹12 lakh CTC
With 50% basic, full PF and no gratuity in CTC, basic is ₹6 lakh and employer PF ₹72,000, leaving a gross salary of ₹11.28 lakh. After employee PF (₹72,000) and ₹2,500 professional tax, and zero income tax in the new regime (taxable income stays under ₹12 lakh), in-hand pay is about ₹87,800 a month. Switch PF to "capped" and in-hand rises because less goes into PF, though your retirement savings fall.
Tips before you accept an offer
- Ask for the CTC break-up: basic, HRA, special allowance, PF, gratuity, variable pay and insurance.
- Variable or performance bonus is not guaranteed; leave it out of CTC here to see the reliable monthly figure.
- A higher basic means more PF and gratuity (good for savings) but lower monthly cash.
- If you pay rent and have large deductions, compare the old regime as well – HRA exemption can change the answer.
The figures are estimates for typical private-sector salary structures in India; your employer's payroll may differ in rounding, allowances and the PF wage definition. For information only, not tax or financial advice. Tax slabs as on 3 November 2026 (FY 2026-27). Built for tech and gaming professionals by Gaming PC Price.
Frequently asked questions
What is the in-hand salary for ₹12 lakh CTC?
About ₹87,800 a month with 50% basic, full PF, no gratuity in CTC and ₹2,500 professional tax under the new regime. Your structure may change this.
Why is employer PF deducted from CTC?
Because the employer counts its own 12% PF contribution as part of your cost to company, even though it goes to your EPF account, not your salary.
Is gratuity paid every month?
No. Gratuity is paid on leaving after at least five years of continuous service; if it is in your CTC it reduces monthly cash.
How much professional tax will I pay?
It depends on the state; the maximum is ₹2,500 a year. Some states, such as Delhi, do not levy it.
Is variable pay included?
Leave variable or performance pay out of the CTC field to see your guaranteed monthly in-hand salary.